4 Most Common Mistakes Made by First-Time Home Buyers

Are you planning on buying your first home in the near future? Are you worried about making a mistake during the process that could cost you a significant amount of money? By knowing some common mistakes, you can avoid them and save yourself a great deal of time and frustration.

Purchasing your first home can be one of the most exciting experiences of your adult life. But if you aren’t careful, it can also turn out to be one of the worst experiences in your life. Here are some of the most common mistakes inexperienced homebuyers make and ways to avoid them.

Mistake #1: Thinking that buying a power of sale home is always going to be a great deal.
Buying a power of sale home (sold by the mortgage holder after a default) at a great bargain is often more difficult than it seems. Usually, buyers experienced with foreclosures are the ones able to get the best deals. A first-time homebuyer stands at a real disadvantage. Typically, a foreclosed home has been vacant for several months before it is put on the market. During that time, vandals can steal the pipes and wires, drag off the cabinets and appliances, or squat in the home. Animals can burrow into the house, eating holes in walls, chewing on wires and spreading their feces. Wind, rain, and snow can cause structural problems. Leaving a house empty for an extended period of time is a recipe for disrepair. Experienced buyers know this and know what to look for. They also know how much to estimate repairs will cost. First time homebuyers have none of this knowledge.

 If you want to avoid making a major financial mistake and still purchase a foreclosure, speak to someone knowledgeable with foreclosures and get an idea of common problems. Then estimate the cost to make these repairs and decide if it’s still a good financial move.

Mistake #2: Not knowing what to look for in a qualified buyer’s agent.
Qualified buyer’s agents can help a homeowner buy a home in two ways. First, they can help you identify a suitable property that is well priced for the market. Second, they can help you quality for a mortgage by organizing and presenting your finances in a way that appeals to lenders. As a result, finding a good buyer’s agent is an important step. A good agent will listen to your needs, spend time with you, and won’t get pushy. They will have experience and be knowledgeable about the market. A buyer’s agent, unlike the seller’s, works in your best interest and should represent you, not the seller. Be sure your buyer’s agent does not have any special relationship with the seller’s agent. This is a conflict of interest that could undermine their advice.

To find a good buyer’s agent, ask friends and relatives who have purchased a home recently if they could recommend someone they used. If not, interview some buyer’s agents to find out if they have experience working with first time buyers and with buyers in your market. This will help you find one that is qualified to take you on as a client.

Mistake #3: Not understanding the actual costs of owning a home.
As a first time home buyer, you might think that as long as you can afford the mortgage payments, you can afford that home. But this is simply not true. A mortgage payment is just one of many home ownership costs. Property taxes and homeowner’s insurance should factor into your cost equation. Maintenance and repairs are also something to consider because your home will definitely need repairs and upkeep regardless of how new it is.

Several of these costs can sometimes be rolled into your mortgage payment. But it is important to consider all of these costs in addition to the mortgage payment so you can decide how much home you can actually afford to buy.

Mistake #4: Failing to get a professional inspection.
Getting a home inspection is an important part about buying a new home, but many inexperienced home buyers simply take the seller’s word that there is nothing wrong with the house. A seller often isn’t under any obligation to tell you about the mold in the basement, or the leak in the roof, or anything else that may affect the sale of the home. In most cases, the seller’s agent will hire a home inspector to inspect the home before the sale. But this can be a conflict of interest since they are being paid by the seller.

To avoid this mistake and to save yourself from huge problems in the near future, hire an independent home inspector. These inspections often only cost a few hundred dollars but they can save a buyer thousands of dollars – or even in rare cases hundreds of thousands of dollars - if they find something major that needs to be repaired. Most home sales are based on a contingency of the results of the home inspection so you can either opt out of the purchase or ask the seller to make the repairs if you aren’t comfortable with the results of the inspection. Often, home inspections pay for themselves. Sellers will often reduce the purchase price as compensation for problems discovered during an inspection.

These are some of the more common and financially costly mistakes that first time home buyers and even some experienced home buyers make. But by educating yourself on the common mistakes, you can avoid them yourself sleepless nights and a lot of money when buying your home.

I help many first time home buyers purchase every year - contact me to find out how I can help make your first purchase a great experience!

Facebook Timeline is Here - Cut-off Date is January 31st!

So that's it, Facebook friends. Everything you've ever posted to the site is in one place for all of your so-called friends to see in one long, scrolling page called a timeline.

What was optional is now mandatory for its 800-million users, and if you want to wipe anything off your Facebook wall you have until Jan. 31.

That's it - anything you've posted (pictures, rants, etc...) will be permanent after January 31st!

Better get deleting....

Mortgage Rate War is Heating Up ..... 10-year fixed rate for under 4%

A 10-year mortgage is now available for under 4 per cent. You can thank the banks for this unheard-of rate. In the past week or so, competition between them on mortgage rates has gone nuclear.

Have you caught all the warnings about how the house that you can afford now because mortgage rates are so low will crush you when borrowing costs rise? With a 10-year mortgage, you’ve got long-term cost certainty.  This is a fantastic opportunity for somebody to lock in and have peace of mind for 10 years without worrying about a renewal.

Low mortgage rates have a big impact on affordability, and that’s a point that supports buying now if you plan to live in your house for a good long while and can afford the costs of home ownership while meeting your savings obligations.

Low is a word that may actually undersell what’s happening in the mortgage market right now. Last week, Bank of Montreal announced a 2.99-per-cent rate for five-year fixed-rate mortgages amortized over 25 years or less. That’s the lowest rate on record for this type of mortgage.

Other banks announced a special rate of 3.99 per cent for seven years, a deal that Vancouver mortgage planner Robert McLister said was not as good as the BMO offer despite providing two more years of rate certainty. “There’s no question in my mind that the five-year rate would work out better,” said Mr. McLister, editor of the Canadian Mortgage Trends blog.

It’s a different story with a 10-year mortgage for 3.99 per cent, which became available late last week from online bank ING Direct. According to the RateHub.ca website, 10-year rates as low as 3.84 per cent can be had through lenders working with mortgage brokers.

Not too long ago many experts believed variable-rate mortgages were superior to all fixed-rate options. But while the banks have been highly competitive on fixed-rate mortgages lately, they’ve pretty much ruined the variable-rate option by cutting way back on discounting.

You can get a variable-rate mortgage today for 2.8 to 3 per cent at best, which is darn close to the cost of locking in for four or five years right now, and you’ve got zero rate certainty. Every time the prime rate rises in the next several years, so will your borrowing costs. “The variable-rate party’s over,” Mr. Gaetano said. “Those products are dinosaurs.”

Why consider buying now? Because you can borrow money at 3.99 per cent or a bit less for 10 years. It’s like freezing time at the exact best moment ever to finance the purchase of a house. If the price of your home declines, it’s bound to be on the rise again a decade from now. Meanwhile, you’d have the chance to put a decade’s worth of salary increases to work in ramping up your payments and making periodic lump-sum payments.

One hitch with 10-year mortgages is that you won’t likely get the best rates from the big banks. The banks don’t much like 10-year mortgages because they can’t easily securitize them, which means packaging them up to sell to investors. That means you’ll may need to visit a mortgage broker or check out ING Direct.

Contact me today to get started on your home purchase!

Winter Newsletter

Winter Market Update, Planning an In-Law Suite and Home Energy Saving Ideas all right here! http://www.coldwellbankerpbr.com/newsletter/realestateupdate_Winter2012-kimlouie.pd

Bank of Canada Rate Holds Steady Again

In times of economic uncertainty, being predictable can sometimes be a good thing.

 

This morning, the Bank of Canada announced that it will, once again, hold the line, with the overnight rate staying at 1 %. The Bank Rate is correspondingly 1 1/4 per cent and the deposit rate is 3/4 per cent.

 

Low interest rates appear to be here for a while, but make sure if you are thinking of buying you take advantage of this time to pay down your principle as rates remain low.

 

You may be able to buy at the end of this year or early next year just before the rates go up, but then you've lost out on the opportunity to pay more down on the principle,which could costs you thousands of dollars.

 

Contact me if you want to discuss current market conditions or what homes may be on the market that are perfect for you.

Thinking of buying a business? Read this first ....

At some point, almost everyone dreams of having their own business. We want to be our own boss, run the show and do work that we truly love.

Sometimes it can be easier to buy an established business with a proven track record than to start one from scratch. But chartered accountant Denham Patterson, a CA and business advisor in Woodbridge, Ont. says there’s a lot to think about before you quit your job to start living the dream.
Here are seven suggestions that Denham says would-be business buyers should carefully consider before signing off on that offer-to-purchase.

1. Do your homework. Make sure there’s a market for your product or service – one that hasn’t been saturated. A motel in a small town with no tourism isn’t likely to survive very long. Nor is a manufacturer of products with a finite lifespan, like a company making souvenirs for the 2010 Olympics.

2. Shore up your savings. Changes in ownership can mean changes in revenue. Will you have enough to live on while you get the business on track? Consider too that your financial circumstances may change for quite some time. Will you be able to maintain your lifestyle or scale it back if necessary?

3. Do what you know. There’s no substitute for experience. On occasion, you might have to overhaul that transmission or prepare that crème brulé yourself. Stay clear of businesses you know nothing about.

4. Include a price adjustment clause and a full disclosure agreement in the deal. Past performance and historical balance sheets won’t reveal if your biggest customer is about to pull his business or if a key supplier is going under. Nor will they warn you about new regulations that are pending or legislation that can destroy your business.

Add a proviso to the buy-and-sell agreement that will give you compensation if things don’t work out due to circumstances beyond your control. A full disclosure agreement will guarantee that you get complete information about the true state of the business, the condition of any equipment and whether it’s adequate to meet your needs and those of your customers.

5. Make sure your family supports the plan. Talk things through with your spouse and children. Everyone needs to understand that income and family time may change, at least for a while.

6. Consult the professionals. “People tend to react emotionally,” Denham says, “And think they can do it all themselves. It’s important to talk with experts – REALTORs, lawyers, chartered accountants and business valuators – who will give you the straight goods on the business you’re considering, and your suitability for it.”

7. Get lots of advice, then make the final decision yourself. Listen carefully to what all the experts have to say. Then, trust yourself to decide. When all is said and done, you’re the one who will take the risk, do the work and live with the consequences.

Written by the Institute of Chartered Accountants of Ontario.

Lowest 5-year Interest Rate Ever, Posted This Week by BMO

History was made with interest rates on Thursday.

The Bank of Montreal has dropped its’ five-year fixed mortgage to 2.99 %, which represents the lowest seen in Canadian banking history. 

This is a time limited offer, ending January 25, which is a move intended to draw in more real estate customers in the increasingly competitive marketplace.

There are some strings attached to this offer; lump sum payments are limited to 10 % of the principal each year. The mortgage is also based on a 25-year amortization period.

The Bank of Canada is expected to keep its overnight rate low until 2013 as well, amidst growing global uncertainty.

Historically low rates and lots of inventory of homes - perfect time to move up or to buy your first home.  Contact me today and we can get started!

Rapid Transit for K-W Underway - Public Consultation Sessions Scheduled

The Regional Municipality of Waterloo is proposing a rapid transit system to enhance transit service in high-demand transportation corridors and to guide and manage long-term growth within the Region.

Stage 1 of the rapid transit system consists of light rail transit from Conestoga Mall to Fairview Park Mall and adapted bus rapid transit from Fairview Park Mall to the Ainslie Street Terminal.

As part of the Ontario Regulation 231/08 Transit Project Assessment Process, the Region’s rapid transit team is hosting three public consultation centres. Information will be available at the centres regarding potential impacts that the rapid transit project may have on the environment.  Public comments and feedback will be collected at each centre.

Tuesday January 24, 2012, 3 to 8 p.m.

First United Church, 16 William Street West, Waterloo

Wednesday January 25, 2012, 3 to 8 p.m.

The Region of Waterloo, 150 Frederick Street, Kitchener

Thursday January 26, 2012, 3 to 8 p.m.

The United Kingdom Club, 35 International Village Drive, Cambridge

All locations are accessible by transit; please see www.grt.ca or call 519-585-7555 for routes and schedules. These events are also accessible for people with disabilities. If you require assistance to participate or to access information in alternative formats, please contact the Rapid Transit Infoline below at least five days prior to the consultation that you plan to attend.

All comments and information received from individuals, stakeholder groups and agencies regarding this project are being collected to assist the Region of Waterloo in making decisions on this project.  The project follows Ontario’s Transit Project Assessment Process.  Under the Environmental Assessment Act and the Municipal Act, personal information such as name, address, telephone number, and property location that may be included in a submission becomes part of the public record and may be released if requested.  If you have questions about the potential release of your information or about the collection of personal information, contact the Rapid Transit Infoline below.

Can't attend but still want to be involved?

Facebook: facebook.com/ROWRapidTransit

Twitter: twitter.com/ROWRapidTransit

E-mail: rtinfo@regionofwaterloo.ca

Website: www.regionofwaterloo.ca/rapidtransit

Infoline: 519-575-4757 x3242

Canadians Wrongly Believe We are in a Recession: Poll

Sometimes a little bit of information can be a dangerous thing.

This is apparently being reflected by many Canadians in terms of their views and attitudes on the Canadian economy. According to a recent survey sponsored by the Economic Club of Canada, many Canadians believe that we are in recession, when in fact we are not.

The poll found that only 25% of respondents feel optimistic about the economy, which represents a drop of more than 10% from last year. A staggering 70% of respondents believe that the country is experiencing a mild recession, while economists insist that, while the economy faces some challenges currently, we most certainly not in a recession.

It’s no big surprise, really. Everywhere Canadians turn these days there is negative economic data, cautious warnings about slowing economic growth, dwindling consumer spending in the face of elevated household debt levels and employment uncertainty.

Coupled with the constant media attention on the fact that the Euro zone is likely facing a recession, it is not entirely unexpected that Canadians, who may not have access to all the data, or the training to interpret it, may think that the country is in fact, in a recession.

It’s not just misperception either; the findings of this online poll suggest that there is a disconnect between the crunching of numbers, presentation of data, and the way that Canadians actually feel about their economic prospects in general.

While most Canadians do not have economic training, many do feel that they are involved with it- in that they are on the receiving end of the financial impact.

While things are perhaps not optimum, they could be much worse economists argue. Economic growth is slow, but is expected to sluggishly tick along; while unemployment is increasing, it is still lower than it has been in the past. Some pockets of the country are even experiencing a job boom.
The housing market, for instance, continues to outshine and outpace the economy, taking advantage of the sound fundamentals that propel the market for growth. While many expect the market to moderate in 2012, it is still expected to grow at a reasonable pace.

As Penney points out too, there is a clear role for Mortgage Professionals to help cut through all the news reports and statistics: “Of course, as professionals, we need to remain upbeat about the economy ourselves. Not to create the notion for our clients that everything is rosy, but to explain and confirm things like how our economy is built on strong financial practices, and that the trouble that we see in other places such as the US and Europe, were brought on by acts of greed and complacency, particularly when it comes to the banking sectors. By doing so I believe we can clarify many of the stories that these people are seeing on television and reading in the newspapers about the world is going to collapse.”

If you are interested in more information please let me know as there is an Economic Update being presented by the Assistant Chief Economist from RBC at my office.  It is a no-cost event but you require an invitation to reserve a seat.

All the New Coldwell Banker Property Listings in this Digital Book!

http://issuu.com/kwtreb/docs/87731.20.1.cb?mode=window&viewMode=doublePage

contact me if you want more information on any of these properties!

2011 saw average residential home sale prices rise 4% in K-W

The Kitchener-Waterloo Association of REALTORs released it's December sales stats as well as the 2011 sales numbers today.

The 329 residential sales through the Multiple Listing Service (MLS®) of the Kitchener‐Waterloo Association of REALTORS® (KWAR) in December mirrored sales from the previous year. December’s results bring the total number of residential homes sold by REALTORS® through the KWAR MLS® System in 2011 to 6,252, a 2.1 percent decrease compared to 2010.

The total dollar volume of all residential properties sold last year increased 1.8 percent to $1,881,532,761, reflecting the steady price gains, and ongoing demand for homes in the higher price ranges.

The average price of all residential properties sold in 2011 increased 4 percent to $300,949. Single detached homes sold for an average price of $342,659 in 2011, a 3.9 percent increase relative to 2010. In the condominium market the average sale price in 2011 was $205,354, a 3.5 percent increase over the previous year.

“2011 was a great year for home buying and selling,” says Sara Hill, president of the KWAR. “Waterloo region continues to be a desirable place to live with a strong local economy. Low interest rates certainly continued to support buyers while sellers benefited from steady gains in home prices.”
Home sales in 2011 included 4,118 detached homes (down 0.3 percent from 2010), 1,200 condos (down 1.7 percent from 2010), 497 semis (down 1.4 percent from 2010), and 372 townhouses (down 21.5 percent from 2010).

Contact me today for information about the real estate market in your neighbourhood.

Looking back at 2011, the president of the KWAR observed that the beginning of the year started with slower sales activity and that by June, sales started to gain momentum.

“Moderate demand in early 2011 was likely the result of the many buyers who purchased in the latter part of 2009 and early 2010 to avoid anticipated higher mortgage rates, and the HST,” says Hill. “Then, when adjustments to the rules for government-backed insured mortgages were implemented in March of 2011, this may have further impacted the ability for some to enter the housing market, particularly first-time buyers.” First-time buyers are an important segment of the KW real estate market, according to the president of the KWAR, “because the population of KW is younger than the provincial average.”

Baby Boomers are shaping Canadian Real Estate: CMHC

There is no question that housing plays an important role in the Canadian economy, but a new report entitled “The Observer” from CMHC suggests that it is a driving force in the economic health of the country.

The CMHC says, “Housing-related spending accounts for more than 20 per cent of Canada’s Gross Domestic Product, contributing about $330 billion to the Canadian economy in 2010 — up 7.1 per cent from $308 billion in 2009.”

“The Observer is unique in its in-depth review of housing conditions and trends, including developments — both domestic and international — that influence housing finance and housing market developments in Canada,” said Karen Kinsley, President of CMHC. “The Observer’s data provides insight into Canadian residential mortgage practices and housing market trends, while highlighting the importance of housing in this country.”

The report examined several interesting trends that have begun to take root and alter the housing market in this country, among them the rise in popularity for condo living, a return for buyers to urban centres and the emerging importance of the Baby Boomer as a real estate buyer.
The report predicts that seniors will comprise nearly 24% of the population by 2036, which is a significant rise from current levels. What is interesting in this regard is that seniors have specific housing requirements, and that the sheer number of Baby Boomers stands to reshape the housing industry as we know it.

“As people age, their needs are likely to change due to disabilities, medical conditions, changes in their household composition, and/or changes in their financial situation.
Population aging therefore requires various forms of housing, a range of models of coordinating housing with support services, and community planning that respond to the needs of seniors and enhance their quality of life. ”

The report also touches on the impact of the continued low interest rates in the country, and the tremendous influence they had on raising housing prices nationally.

There has also been a definite shift, leaning towards the construction of condominiums, as land becomes scarce in some urban centres and as housing tastes begin to drift towards `simplified living` associated with condo living. The report says, “ Over half of all housing starts in Vancouver, 48% in Montréal and 45% in Toronto were intended for condominium tenure. “

There has been some concern about the spike in condo construction, suggesting that the surge in construction portends areas to become vulnerable to market correction, due to an oversupply, but many in the business feel that there is enough demand to meet the increase in supply.